'Write-off era over, asset quality review served banking well'

State Bank of India chairman Dinesh Kumar Khara says the banking system has learned from past mistakes and lending has become much better and much more informed. The bank, which has a deposit base of ₹46.89 trillion, has ploughed back about ₹65,000 crore of profits to the capital, he said in an interview. "I would say that perhaps it is a golden phase. Practically all the sectors are firing, if I may say so. It's a very positive sign. Also, when we look around the globe, the Indian economy is doing very best. But yes, of course, it is more because we are all internally focused," he told Hitesh Vyas, George Mathew and Sandeep Singh in an interview. Edited excerpts:

- Hitesh Vyas, George Mathew and Sandeep Singh

How is the banking sector performing?

The banking sector is doing pretty well. Last couple of years, the way the public sector banks have evolved, I think it is quite remarkable. All public sector banks have turned around. We have also done well.

Last year, we recorded the highest-ever profit and crossed the milestone of ₹50,000 crore. It gives a lot of satisfaction. Numbers are one part of the story, the other part of the story is building resilience, structures and systems, which eventually will go a lon way.

Is the era of massive write-offs, which we saw in the past, over now?

I would say there were lessons that the banking system learned from past mistakes. Different banks, at different stages, strengthened their risk management and underwriting practices.

There are also other contributors from the ecosystem, particularly there was never an insolvency law in the country in the past and later the law and structures around that came into existence.

All these factors put together have created an environment which has helped the banking system to ensure that the lending becomes much better and much more informed.

So, I think these are the factors which have led to a situation where I feel that what you mentioned in terms of the era of write-offs, seems to be behind us. I would also like to mention that of late we have seen that it's a responsible borrowing from the corporates. As far as the retail (loan) book is concerned, it is all linked to the (credit) bureau scores.

And also, the aspirational classes of the population are mindful of the fact that if at all their credit scores get spoiled, they will have challenges going forward. So, again there is responsible borrowing even on the retail side.